Dickson Concepts Makes Deal to Take Control of Barney's

Barney's Inc., the cutting-edge retailer of luxury goods that fell into bankruptcy when its expansion dreams collided with a Japanese partner, said yesterday that Dickson Concepts (International), a Hong Kong-based retail concern, would acquire control of the family-owned business.

The sale, subject to the approval of the Federal Bankruptcy Court, is clearly pleasing for both the Pressman family, which founded Barney's, and Dickson. Bob and Gene Pressman, who have been at war with their former partner, the Isetan Company of Japan, will now be able to untangle themselves from the bankruptcy and the ensuing pieces of litigation that went with it. Further, they may realize their dreams of an international Barney's, albeit with a new owner in charge.

Dickson Poon, the chairman of Dickson Concepts, now gets his foot in the door of the United States retail market, a territory he was longing to enter, and the opportunity to meld some of the operations of his other luxury goods businesses abroad, including Harvey Nichols, a high-end department store in London.

''We are thrilled to death with this deal,'' Bob Pressman said yesterday in a telephone interview. ''Dickson Poon's vision is identical to our vision, which is the globalization of luxury retailing.''

Under the terms of the agreement, which was reached on Friday, Dickson Concepts will take control of 51 percent of Barney's, paying $78 million for the equity stake.

In addition, Dickson will provide about $127 million in new financing for the company, $52 million of which will be in the form of a senior convertible note that will either be repaid to Dickson or turned into an additional equity stake in the future. A $42 million note will also be issued that will be repaid by future royalties from Isetan for the use of the chain's name, Barneys New York, in Asia.

Barney's creditors will be left to divide the $205 million and the 49 percent of equity that has been left. The biggest question is how much would go to Isetan, which is almost certain to be a future landlord of Barney's and is now its biggest creditor.

Bob and Gene Pressman, the co-chief executives of Barney's, have been guaranteed a role in the reorganized company, though it is not yet clear what their titles or responsibilities will be.

It is quite likely, however, according to people close to the deal, that Mr. Poon will put the chief executive of Harvey Nichols, Joseph Wan, in charge of Barney's.

The Dickson offer came after 18 months of negotiations, during which other retail and financial suitors, including the parent of Saks Fifth Avenue, also expressed interest. Dickson, however, was the only suitor able to satisfy both the Pressman family and Barney's creditors.

Barney's Inc., which was started as a cut-rate clothing store in Chelsea in 1923 by Bob and Gene Pressman's grandfather, Barney, grew over the years under the stewardship of the Pressman family into a luxury specialty store that often featured the newest in fashions.

The company filed for Chapter 11 bankruptcy protection in January 1996 as a result of a cash crunch from its aggressive expansion and a dispute with Isetan. Isetan, which financed the construction of the three flagship Barneys New York stores on Madison Avenue in Manhattan and in Chicago and Beverly Hills, Calif., always maintained that it was owed millions of dollars in rent. The Pressmans argued that Isetan's building costs were investments it made in exchange for an equity stake.

That dispute spiraled into litigation and bitterness and included a judgment of $197 million against the Pressmans for loans they personally guaranteed. The next step of dividing the spoils will depend largely on negotiations with Isetan, which was absent from the acquisition process with Dickson, and what the Japanese company is willing to settle for. Isetan, however, cannot block the deal with Dickson.

The creditors, in particular so-called vulture investors who took the risk of buying Barney's trade debt for as much as 80 cents on the dollar, are going to insist on recovering the bulk of their claims. Those who take equity in the company will be betting that the company's future earnings, which have been largely depressed by the protracted bankruptcy, will bounce back with Mr. Poon in charge.

Mr. Poon, who will control Barney's outright, will have the final say on how the company spends money. He has a strong record in making retail and luxury-products investments. Beyond Harvey Nichols, he has a controlling stake in Seibu Department Stores in China and the licensing rights.

The deal was struck after intense negotiations and on the heels of other offers. Saks Holdings, which owns Saks Fifth Avenue, had already made a bid in conjunction with Isetan for $290 million for the company, which was rejected, and Saks has said it would offer no more. Dickson Concepts also bid $240 million earlier, but the less-complicated deal was firmly rejected by the creditor's committee, which was not going to go away quietly eating its claims. Further, Texas Pacific Group, an investment firm, was also negotiating with the company through Friday, but did not get to the same numbers.

The companies have until Aug. 15th to complete their agreements and file a motion with the court.